Partnerships often come from unexpected events. Nortel Networks’ latest liason came after a customer thought it and an Israeli maker of base stations would work well together.

The project went well enough that Nortel and Alvarion Ltd. announced Wednesday they are teaming up to offer service providers an end-to-end WiMAX solution with their products and services.

A wireless broadband technology based on the IEEE 802.16e standard, WiMAX is mostly used for carrier and enterprise backhaul. But Nortel and others believe makers of personal mobile devices may embed the technology in their products and therefore expand its use.

Company spokesmen said the deal combines Alvarion’s strength in BreezeMAX and BreezeACCESS platform with Nortel’s core network and backhaul solutions as well as its systems integration expertise. “By combining these strengths we’re able to offer customers a more differentiated offering, and bring these capabilities around WiMAX to market faster,” said Regina Moldovan, Nortel’s director of wireless product marketing.

“We provide together a full WM network that can be deployed by cellular operators, fixed operators, cable operators,” said Uzi Breier, president of the wireless broadband division of Tel Aviv-based Alvarion.

But Nortel also told financial analysts today that the deal will also allow it to allocate more resources towards another 4G wireless technology, LTE (Long Term Evolution). LTE, which won’t appear commercially until 2010 at the earliest, is seen as faster than WiMAX and could be a bridge linking CDMA and GSM cellular standards. Industry analysts believe LTE’s market opportunity is greater than WiMAX’s.

Richard Lowe, president of Nortel’s carrier business, told financial analysts that the Alvarion deal lets him “meter” his WiMax spending and refocus it more towards LTE. By 2015, LTE will be a $10 billion market, he said, not including services, applications and IP backhaul.

Nortel’s strategy will be to win early acceptance of LTE in customer trials, he said, expressing unreserved admiration for the technology. CDMA-based carriers around the world are using some some 80,000 base stations, he said. “I can’t tell you how easy it is to upgrade that install base from CDMA to LTE.”

“I absolutely believe I can win my unfair share of CDMA conversions.”

The Alvarion partnership was created when an unnamed customer asked the pair to join forces and present a combined solution, said Molovan.

“We feel by joining forces we can provide competitive pricing,” said Breier. In addition, he said, through the unidentified project and trials “we demonstrated that the combined solution can reduce the number of base stations required to cover a specific geography by 30 per cent.” That comes in part from Alvarion’s radio resource management technology which increases the power of base stations, he said.

“So it means the cost of total ownership is less, not only in capital expenses but operating expenses, because every base station consumes electricity, you need to rent space to mount the station and base monthly hefty rental fees et cetra.”

The companies will jointly look for opportunities in Canada, the U.S., Korea, Taiwan, Russia, India, Latin America and Europe.

The recently-announced WiMAX-based US$14 billion Clearwire network will be one of their targets. “That is certainly a large opportunity that will likely be one of the opportunities we address,” said Moldovan.

According to Gregory Chua, research manager for wireless and mobile infrastructure at IDC, worldwide spending on WiMAX gear will leap 30 per cent a year over the next five years, hitting US$4.2 billion by 2012. By comparison spending on all cellular infrastructure is only growing by about 2 per cent a year, although it’s a $48 billion market.

Demand for WiMAX is particularly hot in developing countries, he said, where providers are bypassing fixed broadband for communications for their infrastructures.

Finding a partner also allows Nortel to spread its limited resources between WiMAX and LTE (Long Term Evolution), an emerging wireless broadband technology whose standards have yet to be finalized.

“We wanted to make sure we had a good amount of focus, investments and resources around these different areas,” Moldovan said in explaining the Alvarion alliance. “Certainly WiMAX is a burgeoning market. It’s growing very quickly, it’s now here,” she said. “At the same time we see LTE is growing quickly as well. So we felt that it made the most sense to maximize our overall investment and be successful in both markets was to partner with Alvarion, [which would] free up some of our resources internally to also drive the investment in LTE. In this way we’re able to play in both markets actively and aggressively.”

Meanwhile, a group of companies including Cisco Systems, Alcatel-Lucent, Intel, Clearwire, Sprint and Samsung Electronics have formed an association to keep the lid on WiMAX patent fees charged to carriers buying infrastructure gear and handsets. Called the Open Patent Alliance, it will draft what backers call an open property rights model for essential WiMAX patents at “predictable cost” to stimulate demand for the technology.

According to Jon Hindle, Cisco’s director of service provider marketing for mobility products, an independent third-party will decide which manufacturer patents are essential – and thus need to be controlled – and which aren’t.

“If you look at the requirements of service providers, they want the most possible choice [in products]. Any good technology has the possibility of failing if you don’t handle the economics correctly,” he said. While WiMAX is growing, “let’s not take things for granted.”

Creating the OPA is not a bid to block LTE, he added. Both are IP-centric technologies, so from Cisco’s point of view, the more the better. “From a service provider point of view, this [the OPA] is good comfort,” said IDC’s Chua. It hopefully means “they’re not going to get bogged down with such high royalties that it would affect their business model.”

The OPA joins another 4G patent pool led by operators called Next Generation Mobile Networks. Nortel hasn’t joined either group although it has said it will publish its LTE royalty rates. In a statement Nortel noted that equipment makers Motorola, Nokia and QUALCOMM also aren’t members of the OPA.

“Nortel is open to considering patent licensing initiatives that will promote the overall adoption of WiMAX while recognizing the significance and value of patented technology and associated risks,” the statement said.

Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomedia [@] gmail.com